TaxTMI 
TaxTMI 
2025 (6) TMI 988
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.... handling the sale administration would be exempt as per entry number 54 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017? 3. Whether charges received @ 3% of the sale value of birds of VRBFL and Venco for the Veterinary services provided by VHPL (SAC 99835) would be exempt from levy of GST as per entry number 46 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017 as Veterinary service? 4. Whether Laboratory testing and analysis undertaken by VHPL to carry out various laboratory analysis and tests in respect of the birds including feed, water etc. in relation to the brooding, growing and laying of birds, should be classified under Service Accounting Code 9986? 5. Whether charges received @ 7% of the sale value of birds of VRBFL and Venco for the Laboratory testing and analysis services provided by VHPL would be exempt from levy of GST as per entry number 54 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017 as agricultural extension services? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore,....
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....ifferent active registrations under GST on PAN India basis, details of which are provided with this application. 1.6 The Company has entered into an agreement with M/s Venkateshwara Research and Breeding Farm Limited (hereinafter referred to as "VRBFL') dated 3 February 2003 and with M/s Venco Research and Breeding Farm Limited (hereinafter referred to as 'Venco') dated 5 August 2002 for providing services as listed below- (a) Promote, market and sell birds of VRBFL and Venco as well as handle the sale administration for VRBFL and Venco (referred as "Selling arrangement") (b) Rendering assistance to VRBFL and Venco as well as to customers of VRBFL and Venco in connection with growing the birds including creation of proper hygienic environment, medication, vaccination etc. (referred as "Veterinary services") (c) Carry out various laboratory analysis and tests in respect of the birds including feed, water etc in relation to the brooding, growing and laying of birds (referred to as "Laboratory testing and analysis services") 1.7 For the services rendered as per above, VHPL has been receiving consideration in form of commission as per below from both VR....
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....ST as per entry number 46 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017 as Veterinary service? 1.9.4 Whether Laboratory testing and analysis undertaken by VHPL to carry out various laboratory analysis and tests in respect of the birds including feed, water etc. in relation to the brooding, growing and laying of birds, should be classified under Service Accounting Code 9986? 1.9.5 Whether charges received @ 7% of the sale value of birds of VRBFL and Venco for the Laboratory testing and analysis services provided by VHPL would be exempt from levy of GST as per entry number 54 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017 as agricultural extension services? 2. Statement containing the Applicant's interpretation of law 2.1 The applicant company i.e. Venkateshwara Hatcheries Private Limited ("VHPL") has entered into an agreement with M/s Venkateshwara Research And Breeding Farm Limited ("VRBFL") dated 3 February 2003 and with M/s Venco Research And Breeding Farm Limited ("Venco") dated 5 August 2002 for providing services as listed below - (a) Promote, market and sell birds of VRBFL and Venco as well as handle the sale a....
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.... customers b) Preparation of proforma invoice for obtaining advance; c) Obtain the advance and deposit in the bank accounts of VRBFL and Venco; d) Intimate VRBFL and Venco about the order and the delivery schedules; e) Arrange for obtaining the delivery from VRBFL and Venco and delivery to the customers; f) Collect the payments. VHPL is however not responsible for bad or doubtful debts. • Other incidental activities or services: a) Feedback on the performance of chicks supplied b) Handling returns, rejections, shortages, mortalities and complaints etc c) Furnish the market intelligence and reports 2.4.2 The applicant puts significant efforts to grab customers for Group companies to enhance their sales volume. Through the applicant's ideas for the prospective clients towards starting up such new line of business, the applicant persistently endeavour to augment the Group companies operation. The existing broiler breeders who are engaged in commercial day-old chick gets pitched by the applicant for backward integration i.e. purchasing parent chicks of new breed from Group companies and then produci....
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....that contractual intention is to appoint VHPL as a commission agent for sale of birds and chicks of VRBFL and 2.4.8 Notification number 12/2017-Central Tax (Rate) dated 28 June 2017 provides for exemption from levy of GST on specified goods and services. Entry number 54 of the said notification provides exemption from levy of GST on services classified under Service Code 9986 when provided by a commission agent for sale or purchase of the agricultural produce. Copy of the said notification is enclosed herewith. As per the above referred notification, exemption would be available if following conditions are satisfied - a) The service provided is as per service code 9986 b) The service is provided by a commission agent c) The service provided is for sale or purchase of agricultural produce 2.4.9 In our humble submission, the services provided by VHPL to VRBFL and Venco for a commission under Selling arrangement is squarely covered under the ambit of above referred notification, as each of the above three conditions are duly complied with - as discussed herein below - a) The service provided is as per service code 9986 Service code 9986 ....
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.... 9986. Also, in case of M/s Erode Manjal Vanigarkal Matrum Kidangu Urimaiyalargal sangam, Order No. 6/AAR/2018 dated 30th August 2018, the AR authority of Tamil Nadu State has categorically held that Commission Agent providing support services for Agricultural produce (turmeric) and the services extended are right classifiable as Support service to agriculture' under the Heading 9986. Copy of the ruling is enclosed with this application. b) The service is provided by a commission agent The term "commission agent" has not been defined specifically. However, section 2 (5) of the CGST Act defines the term "Agent" which includes a commission agent. "Agent" has been defined to mean a person including a factor, broker, commission agent, arhatia, del-credere agent, an auctioneer or any other mercantile agent by whatever name called, who carries on the business of supply or receipt of goods or services on behalf of another. VHPL has been appointed as Commission Agent by VRBFL and Venco to undertake the following activities on behalf of VRBFL and Venco - - Market and promote sale of chicks - Cause or affect sales for and on behalf of ....
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....fication number 12/2017-Central Tax (Rate) dated 28 June 2017. "agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals - except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. Parent birds and chicks sold by VRBFL and VENCO are animals (poultry) which are reared for food and on which no further processing is done Which alter its essential characteristics. Thus, activity undertaken by VHPL as commission agent of VRBFL and VENCO for sale of poultry products, would get covered as sale of agricultural produce to and should get covered under the ambit of notification number12/2017-Central Tax (Rate) dated 28 June 2017. In Lean & Dickson v. Ball (1925] 10 TC 341 where it was held that poultry farming, where poultry derived sustenance to a material extent from the produce of the land, could be regarded as agricultural activity. Thus, poultry products being covered as "a....
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....r 12/2017-Central Tax Rate) dated 28 June 2017 under the GST law. From the above, following is worth noting - • For the commission received under selling arrangement, VHPL has been rightfully considered as a "Commission Agent". • Even the Mumbai CESTAT has observed that VHPL is a "Commission Agent" when it is receiving 10% commission of the total cost of parent stock sold on behalf of VRBFL and VENCO • Since definition of "agricultural produce" was different under the service tax law notification - which did not include rearing of all life forms of animals (except the rearing of horses) as per definition under the GST law notification, service tax was being paid by VHPL with effect from 9 July 2004. However, since the definition of "agricultural produce" has been changed in the notification issued under the GST law, which now includes rearing of all life forms (except rearing of horses) - which shall include birds and day-old chicks, VHPL would be entitled to exemption from levy of GST as per terms of notification number 12/2017-Central Tax (Rate) dated 28 June 2017. 2.5 Charges received for Veterinary services 2.5.1 Under Veterina....
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.... mainly from veterinary background (i.e. graduates in veterinary science) plus specialized in poultry microbiology/ husbandry (management)/ disease diagnosis appointment letters of few doctors engaged by the applicant for the purpose of veterinary services along with their Form 16 has been enclosed with this application. 2.5.6 The Applicant's veterinary services also includes the following; • Individual programs of vaccination, preventative husbandry and veterinary field trial management. These are preferred to post outbreak intervention. Advice is also given on the refinement of operational hygiene standards. • In addition to veterinary referral and consultancy, technical support and veterinary field trial management is provided to Group companies to support the farms with respect to the potential or prevailing disease around the area of their farms. • Providing clinical services to Group companies for detecting the nature of diseases, health concerns and medication with respect to the same. The applicant has separate veterinary section and laboratory section in its health centres where regular vet services are rendered to Group companies ....
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....application. Therefore, in our humble submission, veterinary services provided by VHPL should be considered as exempted in terms of entry number 46 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017. 2.6 Charges received for Laboratory testing and analysis services 2.6.1 Under Laboratory testing and analysis services, VHPL provides following services to VRBFL and VENCO - • Routine diagnostic services • Specialized laboratory examinations • Proximate analysis of feed and feed ingredients with various tests • Water related tests All the above services are for laboratory analysis in respects of birds of VRBFL and VENCO. Detailed scope of services are in agreements entered by VHPL with VRBFL and VENCO respectively. 2.6.2 All the above services are provided by application of scientific research and knowledge to poultry products. 2.6.3 Vide entry number 54 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017, services by way of agricultural extensions services is exempt from levy of GST. 2.6.4 The term "agricultural extension" has been defined at clause 2 (c) of the notification num....
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....e it only marketable for primary market and which also qualifies as "agricultural extension" service, should also be exempt from levy of GST. Prayer: 1. In light of the above, we pray that the Commission received under "Selling arrangement" clause to be given exemption from GST as per Entry 54 (g) of the exemption Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 ... 2. We pray that "Veterinary Services" to be considered as exempt services by virtue of services rendered by clinic in relation to health care services under the Entry No. 46 of the exemption Notification No. 12 of 2017 Central Tax (Rate) dated 28th June 2017. 3. We pray that "Laboratory testing and analysis services" to be considered as exempt Services as per Entry 54(a) of the exemption Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017. 2.6.7 Applicant files additional Submission dated 17.01.2020 as under:- The applicant Venkateshwara Hatcheries Private Limited having registered office address as Venkateshwara House", S.No.114/A/2, Pune-Sinhagad Road, Pune 411030, have received the aforesaid notice intimating preliminary hearing date, which is scheduled on 22nd Jan, 20....
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....er Service tax law, dated 2nd April, 2014 in case of M/s Venkateshwara Hatcheries Private Limited attached with this application. 5. Cases of violation of Central Excise and Service Tax if any booked during last 5 years. No violations has been booked under Central Excise and Service tax law during last five years. 03. CONTENTION - AS PER THE CONCERNED JURISDICTIONAL OFFICER: (A). Background in brief- The Company has entered into an agreement with M/s Venkateshwara Research And Breeding Farm Limited (hereinafter referred to as 'VRBFL') dated 3 February 2003 and with M/s Venco Research And Breeding Farm Limited (hereinafter referred to as 'Venco') dated 5 August 2002 for providing services as listed below - a) Promote, market and sell birds of VRBFL and Venco as well as handle the sale administration for VRBFL and Venco (referred as "Selling arrangement") (b) Rendering assistance to VRBFL and Venco as well as to customers of VRBFL and Venco in connection with growing the birds including creation of proper hygienic environment, medication, vaccination etc (referred as "Veterinary services") (c) Carry out various laboratory analysis and test....
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....f birds is taxable under GST. Here's why: 1. Nature of Service: Promotion, marketing, and selling activities are considered as "supply of services" under GST as per Section 7 of the CGST Act, 2017. 2. GST Rate: The standard GST rate for commission or brokerage services is 18% under SAC (Service Accounting Code) 9961 or 9997. 3. Reverse Charge Mechanism (RCM): If the commission is paid by an entity covered under RCM (e.g., an agricultural produce commission agent for specific products), the GST liability might fall on the recipient. However, birds do not fall under the category of "agricultural produce," so normal GST rules apply. Question 3:- Whether charges received @3% of the sale value of birds of VRBFL sand Venco for the Veterinary services provided by VHPL (SAC 99835) would be exempt from levy of GST as per entry number 46 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017 as Veterinary service? Clarification: As per Notification No. 12/2017-Central Tax (Rate), Entry No. 46, "Services by way of medical care for animals or veterinary clinic services" are exempt from GST. Scenario: Company Providing....
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.... final e-hearing on 27.03.2025. Mr. Sanjay Chaberia, C.A., appeared made oral and written submissions. Jurisdictional Officer Mr. Sudhir Dingre, Deputy Commissioner, PUN-VAT-E- 606, LTU-1, Pune appeared. We heard both the sides. 05. OBSERVATIONS AND FINDINGS: 5.1. We have gone through the records of the case and the submission made by the applicant in their application and at the time of the personal hearing. We have also gone through the submissions made by the jurisdictional officer vide letter dated 20.3.2025. In the instant case, the applicant is providing the following services to Venkateshwara Research and Breeding Farm Ltd., vide agreement dt. 5.8.2022, the details of which are as under:- A) Selling Arrangement:- The applicant shall render the following services or carry out the following activities for promoting, marketing and selling the chicks for and on behalf of Venkateshwara Research and Breeding Farm Ltd. (VRB) 1. Marketing and promotion for sale of chicks:- a) Establishing and maintaining marketing network for promotion and sale of chicks b) Carry out various sales promotion campaign and other activities including advertiseme....
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....cks, clinical and sub clinical infections. Suggest line of treatment/prescription etc. 4. Feed a) Recommendation regarding feed formulation depending upon the available local ingredients, seasonal and climatic conditions. b) Recommendation about the suitability and level of different feed ingredients based on proximate analysis mycotoxin estimation and micro biological examinations. c) Giving suggestion about specific formulation based on flock performance, growth rate, body weight and egg production of breeders etc. 5. Hatchery a) Give suggestions about preservation of hatching eggs and incubation thereof; b) Impart services to judge quality of chicks produced c) Give recommendation about hatchery sanitation depending on hatchery environment monitoring and looking for microbial load in hatchery. d) Organizing technical seminars & Workshops for the personnel of various hatcheries/farms. e) Communicate the latest developments in poultry industry. 6. Doctors Visit :- Veterinary Doctors and other experts will visit the problematic farm and collect the data regarding all aspects ....
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.... commission from the clients @10% of the value of sale of birds for the selling arrangement, 3% of the value of sale of birds for the Veterinary Services and 7% of the value of sale of birds for the Laboratory Testing services provided by them to the clients. From the copy of the invoice submitted by the applicant alongwith the application, it is seen that they are currently classifying the commission received on sale under Heading 9961, Veterinary services under Heading 99835 and technical testing an analysis services under Heading 998346 and paying 18% tax on the services supplied by them. Under this application, the applicant is seeking classification of selling services under Heading 9986 and claiming benefit of S.No.54 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017. In respect of Veterinary services, they are seeking classification under SAC 99835 read with SI.No.46 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 and in respect of Laboratory testing and analysis services, they are seeking classification under 9986 and exemption under Sr.No. 54 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017. 5.2.1 The various tariff headings and....
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....r Clause 2(d) of the said Notification, "agricultural produce" means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market; 5.2.3 The Explanatory notes to the scheme of classification of services under the various relevant headings are as under :- 998346 Technical testing and analysis services This service code includes: 1. testing and analysis of the chemical and biological properties of materials such as air, water, waste (municipal and industrial), fuels, metal, soil, minerals, food and chemicals; 2. Testing and analysis in related scientific fields such as microbiology, biochemistry, bacteriology, etc .; 3. testing and analysis of physical properties such as strength, ductility, electrical conductivity or radioactivity of materials such as metals, plastics, textiles, woods, glass, concrete and other m....
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....d agricultural economists, cf. 998311 - veterinary services for pets and other animals, cf. 99835 - training of guard dogs cf. 998529 - recreational riding services, cf. 999652 - training of sport and entertainment animals cf. 999662 998619 Other support services related to agriculture, hunting, forestry and fishing This service code includes other support services related to agriculture, hunting, forestry and fishing, n.e.c. 5.3. We find that the applicant is providing services of marketing and selling of chicks, carrying out sales promotion, identification of new customers, etc., in addition to procurement of orders, preparation of invoices, collecting advances, collecting payment and other incidental activities. It is relevant to understand that the applicant is acting as a commission agent for Venkateshwara Research and Breeding Farm Ltd. They are basically engaged in sale of 'chicks' which are sold to other poultry farmers who breed these chicks into hens or roosters. These hens and roosters are then sold by these poultry farm owners for food, meat, eggs etc. It is seen from the applicant's submission that the existing b....
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....act such services are for sale of livestock themselves for the purpose of breeding. Therefore, we find that the services provided by the applicant in the instant case is not sale or support services for any agricultural produce but a sale in the general wholesale trade. Therefore, the said services are appropriately classifiable under Heading 996111. Consequently, we find that the provisions of Sl.no.54 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 would not be applicable to the said services provided by the applicant. 5.4 Veterinary services provided by the applicant. 5.4.1 Under Veterinary services, the Veterinary Doctors of VHPL render various Veterinary services to customers of VRBFL and VENCO. The services provided by Veterinary Doctors of VHPL include - • conducting study and recommending appropriate vaccines • Give timely suggestion on de-baking, despurring and detoeing etc • Recommend preventive medication • Provide guidance / suggestion on selecting birds for breeding purposes • Provide diagnostic services, conduct post-mortem examinations and diagnose the disease conditions and monitor....
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....ement is provided to Group companies to support the farms with respect to the potential or prevailing disease around the area of their farms. (3) Providing clinical services to Group companies for detecting the nature of diseases, health concerns and medication with respect to the same. The applicant has separate veterinary section and laboratory section in its health centres where regular vet services are rendered to Group companies and its customers which is different than the advanced laboratory service. (4) Post-mortem or diagnostic examinations and selecting the appropriate line of treatment. (5) Nutritional advisory for flock health, growth and disease prevention. These includes farm to farm consultancy due to difference in climatic conditions and availability of nutritional feeds that should be provided for breeding of chicks. 5.4.7 With regard to the Veterinary services provided by the applicant, we find that the said services would be appropriately classified under Heading 998352 of the Tariff. The explanatory notes also provide that the said services includes animal and veterinary hospital and non-hospital medical, surgical and dental service....